Problem 9-23Ratio analysis
Use the financial statements for Bernard Company from
Problem 9-22 to calculate the following
for 2012 and 2011.
a. Working capital
b. Current ratio
c. Quick ratio
d. Accounts receivable turnover (beginning receivables at
January 1, 2011, were $47,000)
e. Average number of days to collect accounts receivable
f. Inventory turnover (beginning inventory at January 1,
2011, was $140,000) (Edmonds. Survey of
g. Average number of days to sell inventory
h. Debt to assets ratio
i. Debt to equity ratio
j. Times interest earned
k. Plant assets to long-term debt
l. Net margin
m. Asset turnover
n. Return on investment
o. Return on equity
p. Earnings per share
q. Book value per share of common stock
r. Price-earnings ratio (market price per share: 2011,
$11.75; 2012, $12.50)
s. Dividend yield on common stock
Problem 10-23Service versus manufacturing companies
Goree Company began operations on January 1, 2011, by
issuing common stock for $30,000 cash.
During 2011, Goree received $40,000 cash from revenue and incurred costs that required $60,000 of cash
Prepare an income statement, balance sheet, and statement of
cash flows for Goree Company for 2011,
under each of the following independent scenarios. (Edmonds. Survey of Accounting. 2012)
Goree is a promoter of rock concerts. The $60,000
was paid to provide a rock concert that produced the revenue.
a.b. Goree is in the car rental
business. The $60,000 was paid to purchase automobiles. The automobiles were
purchased on January 1, 2011, had four-year useful lives and no expected salvage
value. Goree uses straight-line depreciation. The revenue was generated by
leasing the automobiles.
a.c. Goree is a manufacturing
company. The $60,000 was paid to purchase the following items.
a.(1 Paid $8,000 cash to
purchase materials that were used to make products during the year.
a.(2 Paid $20,000 cash for wages
of factory workers who made products during the year.
a.(3 Paid $2,000 cash for
salaries of sales and administrative employees.
a.(4 Paid $30,000 cash to
purchase manufacturing equipment. The equipment was used solely to make products.
It had a three-year life and a $6,000 salvage value. The company uses
a.(5 During 2011, Goree started
and completed 2,000 units of product. The revenue was earned when Goree sold
1,500 units of product to its customers.
a.d. Refer to Requirementc.
Could Goree determine the actual cost of
making the 90th unit of product? How likely is it that the actual cost
of the 90th unit of product was exactly the same as the cost of producing the
408th unit of product? Explain why management may be more interested in average
cost than in actual cost. (Edmonds.
Survey of Accounting. 2012)